PSE stock performance in 2010

James Ryan Jonas

Philippine stocks rallied again in 2010, with the Philippine Stock Exchange index (PSEi) closing at 4,201.14 during the last trading day on December 30, 2010 — up 37.6% from the closing index in 2009.

This means that a P100,000 stock investment at the start of 2010 is already worth P137,600 by the end of the year.

According to the PSE, the market capitalization of all publicly-listed companies in 2010 totaled P8.87 trillion, an increase of 47.1% from the 2009 market capitalization of P6.03.

And yet this performance is just half of the stunning 63.0% return of the Philippine stock market in 2009.

Graph: PSEi performance, 2006-2010

The “PSEi 5-Year Returns” graph shows that investing in equities or stocks really pays a lot in the long-term.

If you  invested P100,000 in the PSE index five years ago — without making any withdrawals or additional investments — at the end of 2010, this amount has ballooned to P222,661.

Very good returns, huh? This actually translates to a compounded annual growth rate (CAGR) of 17.36% per year during the past 5 years.

But take note: high return equals high risk. Don’t be blinded by the spectacular performance of stocks because with great returns come a greater possibility of loss.

Still, if you’re looking to invest in stocks this 2011, start by reading our article How to trade stocks in the Philippines.

If you want to learn more about stocks, head over to our Stocks and Stock Trading Guide.

If you are already in the market, join the PMT Forum Stock Trading Discussion Board to meet other Filipino stock traders and investors.

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.